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28 Apr 2016

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New Thai Railways and Dual Track Systems to Lower Logistics Costs (Current Issue No. 2729 Full ed.)

A dual track railway system will be constructed along existing railways to reduce traffic problems and cut the time lost in rail switching that limits rail transport efficiency. As part of the government's multimodal transport program, the dual track railway project is intended to improve the nation's rail infrastructure. The idea is to enhance our entire logistics system by putting in place multimodal systems that have lower costs per unit than road systems have, though they have been the main medium of transport in Thailand for a long time. Once ready, overall logistics costs are expected to fall significantly.
Thailand, as an agricultural nation, secures much of its revenue from farm produce exports, grown on agricultural land across the country. We are also a major exporter of industrially processed goods such as cement and sugar. Railways are the most economical form of transport for much agro-produce, e.g., rice and cassava, as well as other heavy goods.
By virtue of the above reasons, rail transport should be regarded as perhaps the strongest link in the logistics chain, alongside road transport. Once the government dual track railway phase 1 Program, which connects major provinces in each region, is completed, rail transport will take over from roads when cargoes reach provincial centers that would thus serve as cargo terminuses. Rail would then bring their consignments to either processing facilities or ports, becoming the main mode of transport for goods to be dispatched to consumers. In Phase 2 when new rail lines offer connections to more provinces, trade frontiers and border trade hubs, this would spur rail freight traffic further to help bring down logistics costs.
Given above supporting factors, we predict that domestic rail freight, which now accounts for only 1.1 percent of freight forwarding in Thailand, would perhaps climb to 18.2 percent when the dual railway system phase 1 is ready, and rise to 29.7 percent once Phase 2 is completed.

KResearch forecasts that development of the dual track railway system and new rail lines should cut freight forwarding costs. When Phase 1 is finished in 2021, costs should decrease by 5.7 percent per year, and down by a further 9.7 percent when Phase 2 and its new lines are in full operation by 2024.

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